Land rent scheme

The Land Rent Scheme is part of the ACT Government's Affordable Housing Action Plan. The scheme gives people the option of renting land through a land rent lease rather than purchasing the land to build a home.

Under the scheme, people who purchase a single-dwelling residential block (previously unleased land) from the Suburban Land Agency can apply for their Crown lease to be a land rent lease. For potential lessees, choosing this option means reducing the up-front costs associated with owning a home. Lessees don’t need to finance the cost of the land; they need to finance only the costs associated with the transfer of the land (such as duty) and the construction of the home.

For land that you rent under a land rent lease, you pay an annual land rent charge, rates and land tax, if it applies.

You also have to pay conveyance duty on the land rent lease grant. Duty for a land rent transaction is calculated in the same way as other residential property transactions; there’s no additional discount for the value of the land.

If you’re considering the Land Rent Scheme, it’s a good idea to seek independent legal and financial advice before applying.

If you have questions about the availability of land under the scheme, contact the Suburban Land Agency.

Access to the Land Rent Scheme

As of 1 October 2013, the Government restricts those who can access the Land Rent Scheme to low- to moderate-income households that are eligible for the discount land rent rate of 2 per cent. The standard 4 per cent land rent rate is no longer available to new entrants to the scheme.

These changes don’t impact you if you signed your contract for sale before 1 October 2013.

The eligibility criteria for the Land Rent Scheme are different for leases granted before 1 October 2013 and leases granted on or after 1 October 2013.

Leases granted before 1 October 2013

Changes to the Land Rent Scheme on or after 1 October 2013 do not affect you if you already signed your contract for sale before this date.

Lessees from before 1 October 2013 also have no restriction on the transfer of their lease. The Government will continue to assess these lessees on lessee income only.

Land rent payable

Land rent lessees who signed their contract for sale before 1 October 2013 can access both the standard land rent rate of 4 per cent of the unimproved value of the leased land and the discount rate of 2 per cent of the unimproved value, depending on your circumstances. For more information on unimproved land value, visit Land valuations.

When we grant you a land rent lease, you start at the standard land rent rate. To apply for the discount rate, you must meet the eligibility criteria.

If you’re an eligible lessee, the discount land rent rate applies from the date we/us receives your application.

Eligibility for discount land rent rate

The following are the eligibility criteria for the discount land rent rate for Land Rent Scheme participants who signed their contract for sale before 1 October 2013:

  • Property ownership: If you’re a lessee, you cannot own any other real property to remain eligible for the discount rate. If you acquire any other real property at any time during the land rent lease, you must pay the standard rate of land rent. Ownership includes having a legal or a beneficial interest.
  • Residency: At least one of the lessees must live in the home once you’ve been issued a Certificate of Occupancy. If you don’t meet this condition, you must pay the standard rate of land rent.
  • Income: The total annual income of all lessees for the previous financial year must not be more than the income threshold amount in Table 1 below. The income is assessed on lessee income only and does not include the income of any partner.

Income thresholds have been amended from 1 July 2017 see: Taxation Administration (Amounts Payable - Land Rent) DI2017-140.

Table 1 – Total gross income threshold for discount land rent rate (before 1 October 2013)

Number of dependent children

Total gross income threshold

0

$101,200

1

$104,530

2

$107,860

3

$111,190

4

$114,520

5 or more

$117,850

Annual review

If we have approved you for the discount rate of land rent, you need to confirm by 30 September every year that your annual income is still less than the relevant income threshold amount using the Discount Land Rent Application/Review SmartForm.

We conduct an annual review of lessees' income to determine your continuing eligibility for discounted land rent.

If you’re no longer eligible for the discounted land rent rate for any of the following reasons, the standard rate of land rent of 4 per cent applies:

  • your total income is more than the income threshold
  • you fail to take up residency or all of the lessees move out of the home once a Certificate of Occupancy and Use has been issued
  • you purchase other real property.

Leases granted on or after 1 October 2013

Land rent payable

For land rent lessees who signed their contract for sale on or after 1 October 2013, your land rent payments are 2 per cent of the unimproved value of the leased land. You do not have access to the standard 4 per cent rate of land rent. (For further information on unimproved land value, visit Land valuations.

If you become ineligible for the discount rate, you may have to transition out of the Land Rent Scheme.

Eligibility

The following are the eligibility criteria for the discount land rent rate for Land Rent Scheme participants who signed their contract for sale on or after 1 October 2013:

  • Property ownership: If you’re a lessee, you cannot own any other real property to remain eligible for the discount rate. Ownership includes having a legal or a beneficial interest.
  • Residency: At least one of the lessees must live in the home once you’ve been issued a Certificate of Occupancy.
  • Income: To be eligible for land rent, the total gross income of the lessees must not be more than the $160,000 income threshold. We calculate income on a household basis – that is, the income of you and your partner – and include income from all sources, such as a second job, shareholder income, salary packaging benefits and short-term higher duty payments. The income threshold increases by $3,330 for each dependent child (see Table 2 below)
Table 2 – Total gross income threshold for discount land rent rate (on or after 1 October 2013)

Number of dependent children

Total gross income threshold

0

$160,000

1

$163,330

2

$166,660

3

$169,990

4

$173,320

5 or more

$176,650

Once you obtain a land rent block, you must continue to meet the eligibility criteria for the discounted land rent to remain in the scheme.

If your circumstances change and you exceed the income threshold amount for two consecutive years, become the owner of other real property or stop living on the land under the land rent lease, you’ll have to transition out of the scheme. We will notify you, and you’ll have two years to complete the transition. You can do this either by purchasing the land outright from the Government or by transferring the lease to another eligible applicant who meets the eligibility criteria for the discounted land rent.

If you again become eligible during the two-year transition period – for example, through a loss of income or by selling other owned home – you should immediately contact us.

Restriction on transfer

If you’re a lessee and you want to transfer a land rent block to another person, the transferee must also meet the eligibility criteria. The potential transferee needs to contact the ACT Revenue Office to determine whether his or her income is below the relevant threshold amount.

If you’re a lessee and you convert the land rent lease to a nominal rent lease, the restriction on transfer does not apply.

Annual review

We conduct an annual review to determine your continuing eligibility to remain in the scheme. As a lessee, you need to confirm by 30 September every year that your annual income is still less than the relevant income threshold amount using the Application for Discounted Land Rent and Annual Review SmartForm.

You’ll be ineligible to pay land rent if any of the following occurs:

  • your total household income (including your partner’s income) exceeds the income threshold amount for two consecutive years
  • you fail to take up residency or all of the lessees move out of the home once a Certificate of Occupancy and Use has been issued
  • you become the owner of other real property.

Annual land rent increases

To protect you from large rental increases due to increases in unimproved land values, we cap annual rent increases by wages growth.

Conversion of entitlement

If you’re a lessee, you can convert the land rent lease to a nominal Crown lease at any time. The amount you pay to convert the lease is based on the unimproved value of the land at the time of conversion – not on the original value from when you entered into the land rent lease. Your land rent payments do not apply towards the amount you pay to convert the lease.

If you want to buy the land rent block from the Government, contact the Environment, Planning and Sustainable Development Directorate for additional information. Note that there may be fees associated with this process.

Making payments

Although land rent is an annual charge that we bill quarterly, you have the option of paying weekly, fortnightly, monthly or quarterly.

You can make your payments online through Access Canberra.

If we don’t receive your land rent payments by their due date, you’ll incur interest charges on any amount that you haven’t paid; this interest compounds on a monthly basis. We impose these interest charges, which are subject to change during the year, on the 16th of each month.

How to apply

To apply for the Land Rent Scheme, you (and your partner, if any) need to complete the Discount Land Rent Application/Review SmartForm and provide evidence of your income.

When you apply for a land rent block, you also need to attend a Land Rent Scheme information session at the Canberra Institute of Technology (CIT). To register for an information session or to get more information, contact CIT on (02) 6207 3188 or by email at infoline@cit.edu.au.

Once you’ve attended the course, you also need to submit the Acknowledging Attendance statement to the Suburban Land Agency.

What happens next?

The standard time for processing applications is 10 working days once you’ve supplied all the necessary documentation. Incomplete applications delay processing time. Please allow 10 working days before checking on the status of your application.

We’ll let you know the result of your application in writing by email or post.